Reforming medicare: Impacts on federal spending and choice of health plans

Health Affairs

Volumn 20, Issue SUPPL., 2001, Pages

  Thorpe, Kenneth E ^a   Atherly, Adam ^a  

^a EMORY UNIVERSITY   (United States)

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Indexed keywords

EID: 0037756141     PISSN: 02782715     EISSN: None     Source Type: Journal    
DOI: 10.1377/hlthaff.w1.51     Document Type: Article

References (3)

1. Some Medicare reform proposals would allow M+C plans to pass savings along in the form of lower premiums, additional benefits, or both. Under the provisions outlined in H.R. 5661, the Medicare, Medicaid, and SCHIP Benefits Improvement and Protection Act of 2000 (106th Congress), M+C plans may spend their savings in the form of either lower Part B premiums, additional benefits, or both starting in 2003. Our analysis assumes that plans would pass all savings along to consumers in the form of lower premiums. As described in Note 10, this assumption produces higher estimates of plan switching compared with assumptions that plans pass these savings to consumers in the form of additional benefits.
2. R. Feldman and B. Dowd, "Structuring Choice under Medicare," in Medicare: Preparing for the Challenges of the Twenty-first Century, ed. R. Reischauer, S. Butler, and J. Lave (Washington: National Academy for Social Insurance, 1998), 75-123.
3. This option would have plans bid based on Medicare-covered services. For actual plan payments, however, Medicare would publish geographic adjusters (that may only reflect wage differences) and risk adjusters. Plans would use these data when preparing their bids. If wage differences are reflected in the geographic adjusters, there would be less variation in the geographic adjusters than in actual premiums or M+C payments under current law. This would result in lower payments than today in high-cost areas and higher payments in low-cost areas. In our illustration we passed through 70 percent of the underlying variation in current-law payments in the geographic adjustment.